FTY720, a potent immunosuppressive agent, is phosphorylated in vivo into FTY720-P, a high affinity agonist for sphingosine 1-phosphate (S1P) receptors. The effects of FTY720 on vascular cells, a major target of S1P action, have not been addressed. We now report the metabolic activation of FTY720 by sphingosine kinase-2 and potent activation of vascular endothelial cell functions in vitro and in vivo by phosphorylated FTY720 (FTY720-P). Incubation of endothelial cells with FTY720 resulted in phosphorylation by sphingosine kinase activity and formation of FTY720-P. Sphingosine kinase-2 effectively phosphorylated FTY720 in the human embryonic kidney 293T heterologous expression system. FTY720-P treatment of endothelial cells stimulated extracellular signal-activated kinase and Akt phosphorylation and adherens junction assembly and promoted cell survival. The effects of FTY720-P were inhibited by pertussis toxin, suggesting the requirement for Gi-coupled S1P receptors. Indeed, transmonolayer permeability induced by vascular endothelial cell growth factor was potently reversed by FTY720-P. Furthermore, oral FTY720 administration in mice potently blocked VEGF-induced vascular permeability in vivo. These findings suggest that FTY720 or its analogs may find utility in the therapeutic regulation of vascular permeability, an important process in angiogenesis, inflammation, and pathological conditions such as sepsis, hypoxia, and solid tumor growth.